MA WAH YAN AND ANOTHER v. DHARMA REALM BUDDHIST ASSOCIATION, INC. AND OTHERS

HCA 1190, 1191,

1192 and 1193/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 1190, 1191, 1192 AND 1193 OF 2007

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(Consolidated by the Order of Master J Wong dated 18^th July 2012)

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D E C I S I O N

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1.  By a judgment dated 3 August 2016 made after trial, I made an order nisi for the Plaintiffs to bear 60% of D1’s costs.  The Plaintiffs now seek to vary that order, asking that D1 do bear 100% or a percentage of the Plaintiff’s costs.

Legal principles

2.  Costs should follow the event except when it appears to the court that in the circumstances of the case some other order should be made. Order 62, r 3(2), Cap 4A.

3.  A successful party to an action should not be ordered to pay any part of the costs of the hearing simply because he has failed to prove all of the allegations made.  The successful party should not pay any of the costs unless he has acted improperly or unreasonably in raising issues: Re Elgindata (No.2) [1992] 1 WLR 1207.

4.  There is a discretion in the court to deprive a successful party of the whole or part of his costs because he had caused a significant increase in the length or costs of the proceedings by raising issues on which he did not succeed: Commissioner of Inland Revenue v HIT Finance Ltd [2014] 4 HKLRD 412.  That issue must be something so distinct and separate in itself that the decision of it constituted an “event”.  Hong Kong Civil Procedure 2016, Vol 1, §62/3/3.

Analyses

5.  I notice a sentence in paragraph 130 of the Judgment which might cause misunderstanding.  The reference to “most part of the costs at the trial was spent on the first 2 properties” in fact referred to the Lantau Properties and Nathan Road Property.  Virtually no time was spent on the Happy Valley Property at the trial.

6.  With regard to attempts to settle before action, the Plaintiffs rely on a letter dated 13 April 2012 (“the 2012 letter”), and a series of letters from 29 April to 27 May 2016 (“the 2016 correspondence”).

7.  Mr Chong questions the basis for this court to re-exercise its discretion on costs.  He submits that the parties already had an opportunity to make detailed oral submission on costs in the closing submission at trial.  The court was then provided with relevant without prejudice correspondence. Relying on Ralotte Investments Ltd v The Bauhinia Ltd, HCMP 3388/2013, 4 December 2014, Au-Yeung J, Mr Chong submits that the Plaintiffs should not be permitted to re-run their arguments at trial.

8.  With respect, this line of submission was misconceived.  The substantive matter in Ralotte was the question of costs after the case was settled.  In making a decision, the court based itself on written submissions only and hence an order nisi on costs was made just in case there were loose ends on costs to tie up after the decision.  The applicant mistakenly thought it was an invitation to review the substantive costs decision and it was held not to be justified.  That situation was wholly distinguishable from the present case where the costs order nisi, as usual, was made upon handing down of a judgment when the parties have not yet had an opportunity to consider the judgment.  Ralotte was wholly inapplicable.

The 2012 letter

9.  The plaintiffs suggest that this court had wrongly interpreted the 2012 letter (in §134(a) of the judgment) in that D1 had not in that letter asserted a “public charitable trust”. 

10.  With respect, whilst it was true that D1 had not used that term, D1 had relied on causes of action of “implied charitable trust” (a half-baked case on charitable trust) and common intention constructive trust from the start. There could not be any doubt in a reader’s mind that D1 was challenging the deceased’s beneficial ownership and asserting that he was only a trustee.  The plea on charitable trust was improved in subsequent pleadings.

11.  Even accepting that this court had wrongly interpreted the 2012 letter, the correspondence pertaining to it had been overtaken by events, ie:

(a) Joinder of SJ as a party on 9 March 2016;

(b) Amendments to the defence and counterclaim to plead charitable trust expressly on 10 March 2016 (“the latest amendments”);

(c) Further discovery of material evidence in late March 2016 and service of a witness statement of Madam Fu;

(d) The 2016 correspondence.

The 2016 correspondence

12.  About one month after the further discovery, the Plaintiffs made a Calderbank offer on 29 April 2016 to settle the consolidated action. It was repeated in the open offer on 21 May 2016.

13.  At this hearing, it was established, without objection from Mr Chong, that

(i) The offer not to contest the Happy Valley Property was never withdrawn right up to the trial. 

(ii) The offer not to contest the Lantau Properties was withdrawn on 27 May 2016 before trial and the Plaintiffs lost at the trial. 

(iii) The offer to recover the Nathan Road Property was maintained and the Plaintiffs won at the trial.

14.  For item (i), I maintain my view in §134(b) that D1 had not yet rejected the offer but its approach in asking for the plaintiffs’ basis for concession in the open offer was unnecessary and pedantic.  There was no reason to reject it.  In principle, the Plaintiffs should bear costs only up to 27 April 2016 and D1 should bear the Plaintiffs’ costs including part of the Plaintiff’s counsel brief thereafter.

15.  For item (ii), there are contentions pertaining to the correctness of my decision regarding the Lantau Properties which should be addressed in an appeal.  I make no comments on them.

16.  It was not true that the Plaintiffs’ case rested on construction of the Deed of Gift alone as Mr Miu submits.  The Plaintiffs’ concession that the monastery was a public charity trust was up to the year 1972 only (§85 of the judgment).  They continued to deny that the construction of the monastery came from donations. There was no suggestion from the Plaintiffs’ side that the court need not hear oral evidence.  The trial on the Lantau Properties was inevitable.  In fact much of the trial time was used on this Property.

17.  D1’s evidence on donations did not carry weight.  However, applying the principles in paragraph 3 above, it did was an issue that applied both to the Nathan Road Property and Lantau Properties.  It could not be said that D1 unreasonably raised an issue on donation, or any other issues.

18.  In principle, subject to denial of costs on adducing expert evidence (§131 of the judgment) which was not challenged by either party, D1 should have costs in respect of the Lantau Properties from inception of the case.

19.  In respect of the Nathan Road Property, in principle, the Plaintiffs should get all costs from inception of the case since it had won on its claim.

20.  Mr Miu rightly pointed out that the burden of proof was on D1 as the Plaintiffs knew little about the alleged charity. Substantial proof came in March 2016.  The Plaintiffs acted promptly in offering to settle.

21.  The 3 properties formed 3 distinct parts of the consolidated action.  The parties could have considered each one separately in settlement. Likewise the costs in respect of each Property could be considered separately although some issues (such as the deceased’s intention and the donations) would have overlapped.

22.  The Plaintiffs have not shown that D1 had acted improperly or unreasonably in raising issues.  Nor could it be said that D1 had cause significant increase in trial time.

23.  Having considered the further correspondence placed before me and heard the arguments, I am of the view that I had not sufficiently taken into account the timing of the latest amendments, the further discovery and the extent to which the Plaintiff’s offers could have reduced the trial time if the offers had been accepted.  The Plaintiffs would have been entitled to some costs from the Defendants in respect of the Happy Valley Property and all costs in respect of Nathan Road Property.  Still the overall picture was that the Defendants should be entitled to the bulk of the costs of the consolidated action.

24.  Taking all the circumstances into account and setting off the parties’ costs.  I vary the costs order so that the Plaintiffs shall only bear 40% of D1’s costs (ie net of costs of and incidental to adducing expert evidence).

25.  Since the Plaintiffs have succeeded in varying the costs order, I order that D1 do bear costs of this hearing on party and party basis.  The Plaintiffs’ own costs shall be taxed in accordance with Legal Aid Regulations.  D1’s own costs shall be borne out of the charity’s assets on trustee basis.  The SJ’s costs shall be borne out of the charity’s assets on indemnity basis.